When Does Social Security Tax Stop Coming Out of Paycheck?

Employees often notice deductions on their pay stubs for Social Security. This tax is a component of the Federal Insurance Contributions Act (FICA), which funds benefits for retirees, individuals with disabilities, and their families. The federal government sets an annual cap on earnings subject to Social Security tax, and withholding ceases for the year once an employee’s income exceeds this threshold.

The Social Security Wage Base Limit

The primary reason Social Security tax stops being deducted is the annual wage base limit, which is the maximum amount of gross earnings subject to the tax in a given year. For 2025, the Social Security wage base limit is $176,100. Once an employee’s year-to-date earnings reach this amount, the employer must stop withholding the 6.2% Social Security tax.

This process is automatic, as the employer’s payroll system tracks cumulative earnings. For example, if an employee earns $200,000 annually, their paychecks will include the 6.2% tax until their earnings hit $176,100, at which point the withholding stops for the rest of the year.

The maximum Social Security tax any employee can pay in 2025 is $10,918.20. The Social Security Administration adjusts this limit annually to account for inflation and changes in national wage levels.

Distinguishing Medicare Tax Withholding

A common point of confusion is the difference between Social Security and Medicare taxes. Unlike the Social Security tax, there is no annual wage base limit for Medicare tax withholding. All covered wages an employee earns are subject to the 1.45% Medicare tax, regardless of how high their income is, so it will continue to be deducted from every paycheck.

High-income earners are also subject to an Additional Medicare Tax. This adds a 0.9% tax rate on earnings that exceed certain thresholds based on tax filing status. An employer is required to start withholding this additional tax on wages paid to an individual in excess of $200,000 in a calendar year.

Handling Multiple Employers and Overpayments

An overpayment of Social Security tax can occur when an employee works for two or more employers in the same year. Each employer is required to withhold Social Security tax up to the annual wage base limit, and their payroll systems do not communicate to track an employee’s total combined earnings.

For example, if an employee earns $100,000 from Company A and another $100,000 from Company B in the same year, both employers will withhold Social Security tax. Neither employer will know the employee’s total income of $200,000 has exceeded the $176,100 limit for 2025. This results in an overpayment, and the responsibility for recovering it falls on the employee, as each employer acted correctly.

Claiming a Refund for Excess Social Security Tax

When an employee has overpaid Social Security tax due to working for multiple employers, they can claim the excess amount as a refundable credit on their federal income tax return. The overpayment cannot be recovered from the employers. The process begins by gathering all Form W-2 statements received from every employer for the tax year.

The employee must add the amounts shown in Box 4 (Social Security tax withheld) from all W-2 forms. This total should be compared to the maximum Social Security tax for that year, which for 2025 is $10,918.20. Any amount withheld above this maximum represents the overpayment.

This excess amount is reported on Schedule 3 (Form 1040), “Additional Credits and Payments.” The credit will either increase the total tax refund or decrease the amount of tax owed.